2. For greater certainty, the treatment to be accorded by a Party under paragraph 1 means, with respect to a regional level of government, treatment no less favourable than the most favourable treatment accorded by that regional level of government to any like, directly competitive or substitutable goods, as the case may be, of the Party of which it forms a part.
3. Paragraphs 1 and 2 shall not apply to the measures set out in Annex 3-A.
Section C. Tariff Elimination
Article 3.4. Elimination of Customs Duties
1. Except as otherwise provided in this Agreement, no Party shall increase any existing customs duty, or adopt any new customs duty, on an originating good.
2. Except as otherwise provided in this Agreement, each Party shall progressively eliminate its customs duties on originating goods in accordance with its Tariff Elimination Schedule set out in Annex 3-B.
3. Each Party shall apply to an originating good the lesser of:
(a) the tariff rate established in its Tariff Elimination Schedule set out in Annex 3-B; or
(b) the Most-Favoured-Nation ("MFN") rate applicable at the time of the importation of the good.
4. On request of a Party, the Parties shall consult in accordance with this Chapter, to examine the possibility of accelerating or broadening the scope of the elimination of customs duties on an originating good as set out in their respective Tariff Elimination Schedules in Annex 3-B. Such agreements shall be adopted by decisions of the Free Trade Commission at meetings held pursuant to Articles 22.2(6) and 22.2(7) (Rules of Procedure of the Free Trade Commission).
5. An agreement pursuant to paragraph 4 shall supersede any duty rate or staging category determined pursuant to those Parties' Tariff Elimination Schedules in Annex 3-B for that good once approved by each Party to that agreement in accordance with its applicable legal procedures.
6. A Party may at any time unilaterally accelerate the elimination of customs duties set out in its Tariff Elimination Schedule set out in Annex 3-B. That Party shall inform the other Party as early as practicable before the new rate of customs duty takes effect.
7. For greater certainty, a Party may:
(a) increase a customs duty to the level established in its Tariff Elimination Schedule set out in Annex 3-B, following a unilateral reduction for the respective year; or
(b) increase a customs duty on an originating good as authorised by the Dispute Settlement Body of the WTO. Article 3.5: Customs Valuation
The Parties shall determine the customs value of imported goods in accordance with the Customs Valuation Agreement.
Section D. Non-Tariff Measures
Article 3.6. Import and Export Restrictions
1. Except as otherwise provided in this Agreement, no Party shall adopt or maintain any prohibition or restriction on the importation of any good of the other Party or on the exportation or sale for export of any good destined for the territory of the other Party, except in accordance with Article XI of GATT 1994, and its interpretative notes. To this end, Article XI of GATT 1994 and its interpretative notes, are incorporated into and made part of this Agreement, mutatis mutandis.
2. The Parties understand that GATT 1994 rights and obligations incorporated by paragraph 1 prohibit, in any circumstances in which any other form of restriction is prohibited, a Party from adopting or maintaining:
(a) export and import price requirements, except as permitted in enforcement of countervailing and antidumping duty orders and undertakings;
(b) import licensing conditioned on the fulfilment of a performance requirement; or
(c) voluntary export restraints inconsistent with Article VI of GATT 1994, as implemented under Article 18 of the Subsidies Agreement and Article 8.1 of the Antidumping Agreement.
3. This Article shall not apply to the measures set out in Annex 3-A.
4. No Party shall require, as a condition for engaging in importation or for the importation of a good, a person of the other Party to establish or maintain a contractual or other relationship with a distributor in its territory.
5. For greater certainty, paragraph 4 does not prevent a Party from requiring the designation of a person for the purpose of facilitating communications between regulatory authorities of a Party and a person of the other Party.
6. For the purposes of paragraph 4, distributor means a person of a Party who is responsible for the commercial distribution, agency, concession or representation in the territory of that Party of goods of the other Party.
7. Ifa Party adopts or maintains a prohibition or restriction on the importation from or exportation to a non-Party of a good, no provision of this Agreement shall be construed to prevent that Party from:
(a) limiting or prohibiting the importation of the good of the non-Party from the territory of the other Party; or
(b) requiring as a condition for exporting the good of that Party to the territory of the other Party, that the good not be re-exported to the non-Party, directly or indirectly, without being consumed in the territory of the other Party.
8. Ifa Party adopts or maintains a prohibition or restriction on the importation of a good from a non-Party, the Parties, on the request of any Party, shall consult with a view to avoiding undue interference with or distortion of pricing, marketing, or distribution arrangement in the other Party.
Article 3.7. Non-Tariff Measures
1. The Parties recognise the importance of ensuring:
(a) the transparency of non-tariff measures under this Chapter; and (b) that any such measures do not create an unnecessary or unjustified obstacle to trade between the Parties.
2. Recognising the potentially adverse effects of unnecessary and unjustified non-tariff measures, a Party may request ("requesting Party") ad hoc discussions with the other Party on a specific non-tariff measure arising under this Chapter that may adversely affect the requesting Party's interests in trade in goods with the other Party. The requesting Party shall provide the request in writing, identifying the measure and an indication of the provisions of this Chapter to which the concerns relate.
3. When a Party receives ("requested Party") a written request from the requesting Party for ad hoc discussions under paragraph 2, the Parties shall initiate discussion within 30 days of the request being received. If the requesting and requested Parties agree, ad hoc discussions may be initiated within a shorter timeframe.
4. The requesting Party may provide the other Parties with a copy of the request. Any other Party to the Pacific Alliance may participate in the ad hoc discussions only if both the requesting and requested Parties agree.
5. If the requested Party considers that the subject matter of the request should be addressed under a Chapter-specific consultation mechanism established or identified under another Chapter, it shall promptly notify the requesting Party and include in its notice the reasons it considers that the request should be addressed under the other Chapter. The requested and requesting Parties shall agree on the appropriate mechanism.
6. If the discussions under paragraph 3 do not result in a timely resolution of the matter, the requesting Party may refer the matter to the Trade in Goods Committee.
7. Ad hoc discussions under this Article shall be without prejudice to the rights of any Party under this Agreement, including with respect to raising any matter relevant to this Chapter through the Trade in Goods Committee.
Article 3.8. Import Licensing
1. No Party shall adopt or maintain a measure that is inconsistent with the Import Licensing Agreement.
2. Promptly after this Agreement enters into force, each Party shall notify the other Party of its existing import licensing procedures, if any.
3. A Party shall be deemed to be in compliance with the obligations in paragraph 2 with respect to an existing import licensing procedure if:
(a) ithas notified that procedure to the WTO Committee on Import Licensing provided for in Article 4 of the Import Licensing Agreement together with the information specified in Article 5.2 of that agreement; and
(b) in the most recent annual submission due before the date of entry into force of this Agreement for that Party to the WTO Committee on Import Licensing in response to the annual questionnaire on import licensing procedures described in Article 7.3 of the Import Licensing Agreement, it has provided, with respect to that procedure, the information requested in that questionnaire.
4. Each Party shall notify the other Party, of any new import licensing procedures and any modification it makes to its existing import licensing procedures, if possible, no later than 60 days before the new procedure or modification takes effect. In no case shall a Party provide the notification later than 60 days after the date of its publication.
5. A Party shall be deemed to be in compliance with this obligation if it notifies a new import licensing procedure or a modification to an existing import licensing procedure to the WTO Committee on Import Licensing in accordance with Articles 5.1, 5.2 or 5.3 of the Import Licensing Agreement.
6. A notification provided under paragraphs 2 and 4 of this Article shall include the information specified in Article 5.2 of the Import Licensing Agreement.
7. Before applying any new or modified import licensing procedure, a Party shall publish the new procedure or its modification on an official government website or in its official journal. The Party shall do so, if possible, at least 20 days before the new procedure or modification takes effect.
8. Each Party shall respond within 60 days to a reasonable enquiry from the other Party concerning its licensing rules and its procedures for the submission of an application for an import licence, including the eligibility of persons, firms and institutions to make an application, the administrative body or bodies to be approached and the list of products subject to the licensing tequirement.
9. Ifa Party denies an import licence application with respect to a good of the other Party, it shall, on request of the applicant and within a reasonable period after receiving the request, provide the applicant with a written explanation of the reason for the denial.
Article 3.9. Administrative Fees and Formalities
1. Each Party shall ensure, in accordance with paragraph 1 of Article VII of GATT 1994 and its interpretative notes, that all fees and charges of whatever character (other than customs duties, charges equivalent to an internal tax or other internal charge applied consistently with paragraph 2 of Article II of GATT 1994, and antidumping and countervailing duties) imposed on or in connection with importation or exportation are limited in amount to the approximate cost of services rendered and do not represent an indirect protection to domestic goods or taxation of imports or exports for fiscal purposes.
2. No Party shall require consular transactions, including related fees and charges, in connection with the importation of any good of the other Party.
3. Each Party shall make publicly available online a current list of the fees or charges it imposes in connection with importation or exportation.
4. Each Party shall periodically review its fees and charges, with a view to reducing their number and diversity if practicable.
Article 3.10. Export Duties, Taxes or other Charges
Except as provided for in Annex 3-C, no Party shall adopt or maintain any duty, tax or other charge on the export of any good to the territory of the other Party, unless such duty, tax or charge is also adopted or maintained on that good when destined for domestic consumption.
Section E. Special Customs Regimes
Article 3.11. Waiver of Customs Duties
1. No Party shall adopt any new waiver ofa customs duty, or expand with respect to an existing recipient or extend to any new recipient the application of an existing waiver of a customs duty, that is conditioned, explicitly or implicitly, on the fulfilment of a performance requirement.
2. No Party shall, explicitly or implicitly, condition the continuation of any existing waiver of a customs duty on the fulfilment of a performance requirement.
Article 3.12. Temporary Admission of Goods
1. Each Party shall grant duty-free temporary admission for the following goods admitted from the territory of the other Party, regardless of their origin:
(a) professional equipment, including equipment for the press or television, software, and broadcasting and cinematographic equipment, that is necessary for carrying out the business activity, trade or profession of a person who qualifies for temporary entry pursuant to the laws and regulations of the importing Party;
(b) goods intended for display or demonstration;
(c) commercial samples and advertising films and recordings; and
(d) goods admitted for sports purposes.
2. Each Party shall, at the request of the person concerned and for reasons its customs authority considers valid, extend the time-limit for duty-free temporary admission beyond the period initially fixed.
3. No Party shall condition the duty-free temporary admission of the goods referred to in paragraph 1, other than to require that those goods:
(a) be used solely by or under the personal supervision of a national of the other Party in the exercise of the business activity, trade, profession or sport of that national of the other Party;
(b) not be sold or leased while in its territory;
(c) be accompanied by a security in an amount no greater than the charges that would otherwise be owed on entry or final importation, releasable on exportation of the goods;
(d) be capable of identification when imported or exported;
(e) be exported on the departure of the national referred to in subparagraph (a), or within any other period reasonably related to the purpose of the temporary admission that the Party may establish or within one year, unless extended;
(f) be admitted in no greater quantity than is reasonable for their intended use; and (g) be otherwise admissible into the Party's territory under its laws and regulations.
4. If any condition that a Party imposes under paragraph 3 has not been fulfilled, the Party may apply the customs duty and any other charge that would normally be owed on the good, in addition to any other charges or penalties provided for under its laws and regulations.
5. Each Party shall adopt or maintain procedures providing for the expeditious release of goods admitted under this Article. To the extent possible, those procedures shall provide that when a good admitted under this Article accompanies a national of the other Party who is seeking temporary entry, the good shall be released simultaneously with the entry of that national.
6. Each Party shall permit a good temporarily admitted under this Article to be exported through a customs port other than the port through which it was admitted.
7. Each Party shall, in accordance with its laws and regulations, provide that the importer or other person responsible for a good admitted under this Article, shall not be liable for failure to export the good on presentation of satisfactory proof to the importing Party, that the good was destroyed within the period fixed for temporary admission, including any lawful extension.
8. Except as otherwise provided in this Agreement:
(a) each Party shall allow a vehicle or container used in international traffic that enters its territory from the territory of the other Party to exit its territory on any route that is reasonably related to the economical and prompt departure of that vehicle or container;
(b) no Party shall require any security or impose any penalty or charge solely by reason of any difference between the customs port of entry and the customs port of departure of a vehicle or container;
(c) no Party shall condition the release of any obligation, including any security, that it imposes in respect of the entry ofa vehicle or container into its territory on the exit of that vehicle or container through any particular customs port of departure; and
(d) no Party shall require that the vehicle or carrier bringing a container from the territory of the other Party into its territory be the same vehicle or carrier that takes that container to the territory of that other Party, or to the territory of any other Party to the Pacific Alliance.
9. For the purposes of paragraph 8, vehicle means a truck, a truck tractor, a tractor, a trailer or trailer unit, a locomotive, or a railway car or other railroad equipment.
Article 3.13. Goods Re-entered after Repair or Alteration
1. No Party shall apply a customs duty to a good, regardless of its origin, that re-enters the Party's territory after that good has been temporarily exported from the Partyâs territory to the territory of the other Party for repair or alteration, regardless of whether that repair or alteration could have been performed in the territory of the Party from which the good was exported for repair or alteration.
2. No Party shall apply a customs duty to a good, regardless of its origin, admitted temporarily from the territory of the other Party for repair or alteration.
3. For purposes of this Article, repair or alteration does not include an operation or process that:
(a) destroys a good's essential characteristics or creates a new or commercially different good; or
(b) transforms an unfinished good into a finished good.
Article 3.14. Duty-Free Entry of Commercial Samples of Negligible Value and Printed Advertising Materials
Each Party shall grant duty-free entry to commercial samples of negligible value and to printed advertising materials, imported from the territory of the other Party, regardless of their origin, but may require that:
(a) commercial samples of negligible value be imported solely for the solicitation of orders for goods or services provided from the territory of the other Party or a non-Party, or
(b) printed advertising materials be imported in packets that each contain no more than one copy of the material, and that neither that material nor those packets form part of a larger consignment.
Section F. Agriculture
Article 3.15. Scope
This Section shall apply to measures adopted or maintained by a Party relating to trade in agricultural goods.
Article 3.16. Export Competition
1. The Parties reaffirm their commitments made in the 2015 Ministerial Decision on Export Competition, adopted in Nairobi, including the elimination of the export subsidy entitlements scheduled in the WTO for agricultural goods, as well as those commitments related to export credits, export credit guarantees or insurance programmes.
2. No Party shall adopt or maintain any export subsidy on any agricultural good destined for the territory of the other Party.
Section G. Trade In Goods Committee
Article 3.17. Administration of this Chapter
1. Matters relating to administration of this Chapter shall be considered by the Parties through the Trade in Goods Committee established under Article 22.5(a) (Establishment of Cross-Cutting Committees).
2. The Trade in Goods Committee shall have the following additional functions under this Chapter:
(a) promoting trade in goods between the Parties, including through consultations on accelerating or broadening the scope of tariff elimination under this Agreement and other issues as appropriate;
(b) addressing barriers to trade in goods between the Parties arising under this Chapter, especially those related to the application of non-tariff measures and, if appropriate, referring such matters to the Free Trade Commission for its consideration;
(c) reviewing the future amendments to the Harmonized System to ensure that each Party's obligations under this Agreement are not altered and consulting to resolve any conflicts;
(d) consulting on and endeavouring to resolve any differences that may arise between the Parties on matters related to the classification of goods under the Harmonized System and Annex 3-B;
(e) coordinating the exchange of information on trade in goods between the Parties;
(f) assessing matters related to agricultural goods; and
(g) undertaking any additional work that the Free Trade Commission may assign or another Cross-Cutting Committee may refer to it.
2. The Trade in Goods Committee shall consult, as appropriate, with other Committees established under this Agreement when addressing issues of relevance to those Committees.
Chapter 4. RULES OF ORIGIN AND ORIGIN PROCEDURES
Section A. Rules of Origin
Article 4.1. Definitions
For the purposes of this Chapter: aquaculture means the farming of aquatic organisms, including fish, molluscs, crustaceans, other aquatic invertebrates and aquatic plants, from seed stock suchas eggs, fingerlings, fry, larvae, post- larvae and seedlings by the intervention in the rearing or growing processes to enhance production
such as regular stocking, feeding or protection from predators;
FOB means the free on board value of the good, including the costs of transport to the port or site of final shipment abroad regardless of means of transport;
fungible goods or materials means goods or materials that are interchangeable for commercial purposes and whose properties are essentially identical;
Generally Accepted Accounting Principles means the principles recognised by consensus or with substantial authoritative supportin the territory of a Party, with respect to the recording of revenues, expenses, costs, assets and liabilities; the disclosure of information; and the preparation of financial statements. These principles may encompass broad guidelines for general application as well as detailed standards, practices and procedures; indirect material means a good used in the production, testing or inspection of another good but not physically incorporated into that good, or a material used in the maintenance of buildings or the operation of equipment, associated with the production of a good, such as:
(a) fuel, energy, catalysts and solvents;
(b) equipment, devices and supplies used for testing or inspection of the good;
(c) gloves, glasses, footwear, clothing, safety equipment and supplies;
(d) tools, dies and moulds;
(e) spare parts and materials used in the maintenance of equipment and buildings;
(f) lubricants, greases, compounding materials and other materials used in production or used to operate equipment or in the maintenance of buildings; and
(g) any other material that is not incorporated into the good but the use of which in the production of the good can reasonably be demonstrated to be a part of that production;
material means a good or any material such as components, ingredients, raw materials, parts or component parts that are used in the production of another good;
packaging materials and containers for retail sale means materials and containers in which a good is packaged for retail sale;
packing materials and containers for shipment means materials and containers that are used to protect a good during transportation, but does notinclude the packaging materials and containers in which a good is packaged for retail sale;
production means methods for obtaining goods, including growing, cultivating, raising, harvesting, fishing, trapping, hunting, capturing, aquaculture, gathering, extracting, manufacturing, processing or assembling a good.
Article 4.2. Originating Goods
Except as otherwise provided in this Chapter, each Party shall provide that a good is originating if it is:
(a) wholly obtained or produced entirely in the territory of one or more of the Parties in accordance with Article 4.3;
(b) produced entirely in the territory of one or more of the Parties, exclusively from originating materials; or
(c) produced entirely in the territory of one or more of the Parties, using non -originating materials, provided that the good satisfies the requirements set out in Annex 4-A,
and the good satisfies all other applicable requirements of this Chapter.
Article 4.3. Wholly Obtained or Produced Goods
Each Party shall provide that the following goods shall be considered wholly obtained or produced entirely in the territory of one or more of the Parties:
(a) a plant, plant good ora fungi good grown, cultivated, harvested, picked or gathered there;
(b) alive animal born and raised there;
(c) a good obtained from a live animal there;
(d) a good obtained from hunting, fishing, aquaculture, trapping or gathering there;
(e) a mineral good or other naturally occurring substance extracted or taken from there;
(f) a good, other than a fish, crustacean, mollusc and other marine life taken by a Party or a person of a Party from the seabed or subsoil outside the territories of the Parties, provided that Party or the person of that Party has the right to exploit such seabed or subsoil in accordance with international law;
(g) fish, crustacean, mollusc and other marine life taken from the waters outside the territories of the Parties by vessels, provided that those vessels are registered, listed or recorded and entitled to fly the flag of that Party and that Party has the right to exploit such waters in accordance with international law;
(h) a good obtained or produced exclusively from a good referred to in subparagraph (g) on board of a factory ship, provided that the factory ship is registered, listed or recorded in a Party and entitled to fly the flag of such Party;